Sometimes, life can throw financial difficulties your way, leaving you feeling helpless and overwhelmed. Fortunately, California’s legal system has some safeguards in place that can offer a means to a fresh start. One of these life-saving options is Chapter 7 bankruptcy.
However, navigating the nuances of the process often seems confusing and intimidating to those without the experience and expertise of San Diego Chapter 7 bankruptcy attorneys. Let us assure you – it only seems so!
By familiarizing yourself with the sequence of events and debt payment prioritization, you can approach the process with greater clarity and confidence. Combine this knowledge with professional legal advice, and you’re looking at a viable path to a fresh start.
What happens first in Chapter 7?
Chapter 7 bankruptcy, also known as “liquidation bankruptcy”, is designed to help individuals and businesses overcome financial difficulties by liquidating non-exempt assets to pay off their debts. This process involves several distinct steps:
Pre-filing requirements
Before filing for bankruptcy, you’ll have to meet certain eligibility criteria. In California, this entails:
- Passing the means test, which evaluates your income and expenses to determine if you qualify for Chapter 7;
- Completing a credit counseling course from an approved agency within six months before filing (this step is forgone if there are no adequate agencies in the district).
Filing the petition
This is where the bankruptcy process kicks off. The applicant files several forms, including the petition to the California bankruptcy court. The most important benefit here is the initiation of an automatic stay immediately upon filing, which halts all collection actions, thereby providing immediate relief.
Appointment of a Trustee
The court appoints an unbiased trustee who will oversee your case. Their role involves:
- Reviewing your petition;
- Identifying non-exempt assets;
- Scheduling the meeting of creditors;
- Facilitating the liquidation.
Meeting of Creditors (341 Meeting)
Typically, within a month of filing, you’ll attend the Meeting of Creditors, presided over by the court-appointed trustee.
You will have the chance to converse with creditors about your financial situation, which can sometimes lead to a faster resolution of your case and a more favorable outcome.
Liquidation of non-exempt assets
At this point, the trustee will proceed with the selling of non-exempted assets, thereby generating the funds necessary to pay off your creditors. It should be noted that California law does not allow you to choose between federal and state exemptions, which would allow you to determine what assets you can keep. Even so, the most common exemptions are still significant and can include homestead (primary residence), car, personal belongings, and retirement accounts.
Debt discharge
This is the final step of the Chapter 7 bankruptcy process. Once the liquidation is completed, and any objections by the creditors are resolved, the court will grant a debt discharge order. This releases the debtor from any and all personal liability for payment of discharged debts, effectively halting creditors from seeking future recompensation from the debtor.
However, it must be noted that, while Ch7 discharges most debts, there are some obligations that are not allowable for release. These include:
- Income taxes;
- Federal student loans;
- Alimony;
- Child support;
- Some government debts.
Even so, Chapter 7 provides a much-needed respite from creditor advancements, enabling you to recuperate, and setting you on the path of financial independence.
Who are the leading San Diego Chapter 7 bankruptcy attorneys?
If you’re considering Chapter 7 as a means to a fresh start, the Bankruptcy Law Offices of Mark L. Miller are ready to provide comprehensive guidance. With more than 25 years of experience, our legal team possesses an intimate understanding of California’s bankruptcy laws and is well-versed in the nuances governing the process.
Our dedicated lawyers will work closely with you every step of the way, from assessing your eligibility to protecting your assets and ensuring a smooth filing experience. Contact us today or visit our headquarters in the Old Town San Diego and let us fight together for your stable financial future!